Microsoft Q3 2007 Earnings - Microsoft Reports Record Profits, only ships 500k 360's

[sonycowboy]

More any second. But, net income of $5B this quarter :O :O :O

500k 360's shipped WW
$315M loss in the H&E Division

Thursday April 26, 4:10 pm ET Robust demand for Windows Vista and the 2007 Microsoft Office system drives 72% growth in earnings per share REDMOND, Wash., April 26 /PRNewswire-FirstCall/ -- Microsoft Corp. (Nasdaq: MSFT - News) today announced revenue of $14.40 billion for the quarter ended March 31, 2007, a 32% increase over the same period of the prior year. This revenue drove record profits with operating income of $6.59 billion and net income of $4.93 billion. Diluted earnings per share for the quarter grew 72% to $0.50, and included $0.02 in tax benefits and $0.01 in legal charges.

[Fuzzy]

All I want is the shipment breakdown by region. :)

[Link316]

give me more dividends

[Tieno]

I guess people are buying those picture packs...

[BenjaminBirdie]

And lo, did the rest of Microsoft ensure another fine year for the 360 pretty much no matter what.

Phew! I'm really glad that the system has this monolith of support behind it so that it can spend the oodles of cash it takes to get games like Too Human and Alan Wake get made on their own timetables and in the fashion so desired by their developers.

[sonycowboy]

Electronics and Devices loses $315M this quarter vs $402M last year. For the year, they've lost $693M vs $861M last year (3 quaters)



Entertainment and Devices Division ("EDD") products include the Microsoft Xbox video game console system, PC games, consumer software and hardware products, the Zune digital music and entertainment device, TV platform products for the interactive television industry, and Mobile and Embedded devices (principally Windows Mobile software platform and Windows Embedded device operating system). The success of video game consoles is determined by console innovation, the portfolio of video game content for the console, online offerings, and the market share of the console. We believe that the functionality of the Xbox 360 console, games portfolio, and online offerings are well-positioned relative to competitive consoles launched during 2006.

EDD revenue decreased during the three months ended March 31, 2007 primarily because of decreased Xbox 360 console sales. During the quarter, we shipped 0.5 million Xbox 360 consoles as compared to 1.7 million consoles in the third quarter of fiscal year 2006, which was the first full quarter of Xbox 360 console sales. Xbox and PC game revenue decreased $393 million or 44% during the three months ended March 31, 2007 due to the decrease in console sales. Revenue from Zune, consumer hardware and software, and TV platforms increased $103 million or 61% during the three months ended March 31, 2007, primarily reflecting the recent release of Zune and new consumer hardware products. Mobile and Embedded Devices revenue increased $38 million or 30% during the three months ended March 31, 2007 driven by sales growth in Windows Mobile software and Windows Embedded operating systems.

EDD revenue increased during the nine months ended March 31, 2007 primarily due to increased Xbox 360 console sales, sales of Zune, and increased Xbox accessories and video game sales. We shipped approximately 5.9 million Xbox 360 consoles during the first nine months of fiscal year 2007. Since the Xbox 360 console was launched in November 2005, we have shipped approximately 11 million units. Xbox and PC game revenue increased $914 million or 37% during the nine months ended March 31, 2007 as a result of the increased number of consoles sold and related accessories and video game sales. Revenue from Zune, consumer hardware and software, and TV platforms increased $426 million or 68% during the nine months ended March 31, 2007, primarily reflecting the release of Zune and new consumer hardware products. Mobile and Embedded Devices revenue increased $109 million or 31% during the nine months ended March 31, 2007, driven by sales growth in Windows Mobile software and Windows Embedded operating systems.

EDD operating loss decreased during the three months ended March 31, 2007 primarily due to decreased products costs from lower sales of Xbox 360 consoles and increased Mobile and Embedded Devices revenue, partially offset by expenses related to the launch of Zune and increased Xbox 360 console warranty expenses. EDD operating loss decreased during the nine months ended March 31, 2007 primarily due to increased Xbox 360 platform sales and improved Xbox 360 console margins, partially offset by expenses related to the launch of Zune and increased Xbox 360 console warranty expenses. Headcount-related costs increased 10% and 13% during the three and nine months ended March 31, 2007, reflecting an increase in salaries and benefits for existing headcount and a 13% increase in headcount, partially offset by decreased stock-based compensation expense.

For fiscal year 2007, we expect revenue to increase due to the increased availability of Xbox 360 during the entire fiscal year and sales of Zune after its November 2006 launch. Revenue from mobility and embedded devices is expected to increase due to unit volume increases of Windows Mobile software driven by increased market demand for phone-enabled devices and Windows Embedded operating systems.

[Shard]

I want new game announcements, tasty, tasty information, it feeds the mind.

[Link316]

only @ 11M, that's not good

[Draft]

Wow just wow. At this rate, X360 won't be losing any money at all in 3 or 4 years.

[Deepblue]

For fiscal year 2007, we expect revenue to increase due to the increased availability of HALO 3 during the entire fiscal year and sales of Zune after its November 2006 launch. Revenue from mobility and embedded devices is expected to increase due to unit volume increases of Windows Mobile software driven by increased market demand for phone-enabled devices and Windows Embedded operating systems.

Fixed.

[nubbe]

Time for a price drop. The hardcore crowd has been served.

[flammie]

EDD operating loss decreased during the three months ended March 31, 2007 primarily due to decreased products costs from lower sales of Xbox 360 consoles

So Microsoft is still losing money on the 360. No wonder why they're still unwilling to drop the price to put pressue on the PS3.

[Cosmozone]

But, net income of $5B this quarter :O :O :O

Ugh. That's like a never-ending nightmare to me.

[Deepblue]

only @ 11M, that's not good

Time to price drop that sucker!

[Odysseus]

shipping 5.9 million consoles in 9 months, months that happen to include the busy holiday shopping season.... guh. how many units did ps2 ship per year, on average? 18-20 million?

...

get to the mass market, microsoft. before it's too late.

[Mmmkay]

Fixed.

That would probably be fixed if the 07 fiscal year didn't finish on June 30th. ;)

[Vrolokus]

EDD operating loss decreased during the three months ended March 31, 2007 primarily due to decreased products costs from lower sales of Xbox 360 consoles So Microsoft is still losing money on the 360. No wonder why they're still unwilling to drop the price to put pressue on the PS3.

I'm not following how you got from A to B.

[JB1981]

Wii won.

[sonycowboy]

I'm not following how you got from A to B.

Read again. It's saying the division lost less money because they sold fewer HW systems. That is essentially saying they're still losing substantial $$'s per system sold.

[Deepblue]

That would probably be fixed if the 07 fiscal year didn't finish on June 30th. ;)

HALO 3 BETA

[Kurosaki Ichigo]

They overshipped, yes. We can only hope there is also a pricedrop coming so they are clearing stock, just like Sony did with PSP.

Breakdown (PAL numbers specially) would be awesome to know.

[LJ11]

I'm not following how you got from A to B.

What's too follow, they lossed less because they sold/made less. At least that's what their filing states.

Edit: Beaten by Cowboy. Damn this site is slow right now.

[badcrumble]

shipping 5.9 million consoles in 9 months, months that happen to include the busy holiday shopping season.... guh. how many units did ps2 ship per year, on average? 18-20 million? ... get to the mass market, microsoft. before it's too late.

It's highly unlikely that any system this gen will be nearly as successful as the PS2.

[Vrolokus]

Read again. It's saying the division lost less money because they sold fewer HW systems. That is essentially saying they're still losing substantial $$'s per system sold.

Ah, gotcha... thanks. I was reading it wrong.

shipping 5.9 million consoles in 9 months, months that happen to include the busy holiday shopping season.... guh. how many units did ps2 ship per year, on average? 18-20 million?

I'm pretty sure Sony didn't ship 20 million PS2s in their year 2... maybe I'm wrong, though.

[Azih]

You know they really need to provide Game division finances seperate from all this Zune and other miscellaneous crap.

Could some kind Gaffer do that?

[Confidence Man]

at people calling for a price drop. You think they want to lose even more on each unit sold when software sales are very good and their competition is floundering? It's time for a price drop when PS3 starts picking up.

[KeithFranklin]

You know they really need to provide Game division finances seperate from all this Zune and other miscellaneous crap. Could some kind Gaffer do that?

Only if some Gaffer could get Microsoft to do a corporate restructuring to create a Game division.

[sonycowboy]

I'm pretty sure Sony didn't ship 20 million PS2s in their year 2... maybe I'm wrong, though.

Year 1: 10M
Year 2: 18.6M
Year 3: 22.6M
Year 4: 20.1M
Year 5: 16.4M
Year 6: 16.2M

[GhaleonEB]

Read again. It's saying the division lost less money because they sold fewer HW systems. That is essentially saying they're still losing substantial $$'s per system sold.

It certainly explains why they haven't cut the price yet. The delay in the move to 65nm must be wreaking havoc on their business plan.

I'm not surprised at the 500k figure. They're targeting 2m shipped this half, and with the Elite launching in the second quarter (fourth fiscal) shipments will be back-loaded.

They've also pulled down inventory in the channel a bit. They moved 721k in the US in the last three months; probably about a million units WW total. So they cleared 500k out of the channel.

[Vrolokus]

Year 1: 10M Year 2: 18.6M Year 3: 22.6M Year 4: 20.1M Year 5: 16.4M Year 6: 16.2M

Okay, I'm going to go lick my wounds now.

[squicken]

You know they really need to provide Game division finances seperate from all this Zune and other miscellaneous crap. Could some kind Gaffer do that?

That's the whole point. No one gets to see exactly how much any individual product is costing the company.

[titiklabingapat]

at people calling for a price drop. You think they want to lose even more on each unit sold when software sales are very good and their competition is floundering? It's time for a price drop when PS3 starts picking up.

The Wii ICBM is hurtling towards XBOX HQ at around 1 million units per month.

The sooner they recognize the Wii's awesome prowess, the better off they will be in the long run.

[Hiro_Kunimi_80]

The Wii ICBM is hurtling towards XBOX HQ at around 1 million units per month.

wii ?Not a Direct Competitor, sony is..

[PhatSaqs]

at people calling for a price drop. You think they want to lose even more on each unit sold when software sales are very good and their competition is floundering? It's time for a price drop when PS3 starts picking up.

I doubt making money on the hardware anytime before the 3rd or 4th year is in the business plan so they surely have factored in the potential for price cuts. The model is the way it is to allow for software sales to soften and eventually overcome the losses incurred on the hardware. Selling more hardware is the catalsyt.

[KeithFranklin]

$315M loss divided by 500,000 units = $630 loss per system.

In other words the loss isnt just the 360 hardware.

[Mithos Yggdrasill]

It is not a surprise at all: remember that Microsoft is the second largest company in the world.

[davepoobond]

500k for a whole quarter year?

isn't that kind of...low?

[cw_sasuke]

wii ?Not a Direct Competitor, sony is..

yes, keep tellin that 2 yourself... :)

[Y2Kev]

Microsoft is a beast. Simply a beast.

What part of the loss is because of Zune, aka Poon, aka Poop, aka Shit?

[DarkMage619]

The Wii ICBM is hurtling towards XBOX HQ at around 1 million units per month. The sooner they recognize the Wii's awesome prowess, the better off they will be in the long run.

I am pretty sure that MS went into this generation thinking that SONY was their primary concern. I don't think either Nintendo nor MS see themselves as competitors. The two systems don't have many, if any software in common. MS was the one that generated the Wii60 push. I'd like to see some evidence that Nintendo is taking marketshare from MS.

the Dark One

[VALIS]

It is not a surprise at all: remember that Microsoft is the second largest company in the world.

In terms of what? They're #140 on the Fortune 500.

[Metalmurphy]

500k for a whole quarter year? isn't that kind of...low?

Well, with reports of them being Channel Stuffing to reach the 10M target in 1 year, lower shipments now are expected, but they could still be selling well.

[Draft]

I'd like to see some evidence that Nintendo is taking marketshare from MS. the Dark One

NPD is posted once a month.

the Draft One

[KeithFranklin]

500k for a whole quarter year? isn't that kind of...low?

Didnt we already know this with the 10.4 shipped through the end of 2006. Retailers werent going to ordering a bunch.

Also dont forget this part of the MS earnings report.

Microsoft posted a net profit of $4.93 billion, or 50 cents per diluted share, in its fiscal third quarter ended March 31 versus a profit of $2.98 billion, or 29 cents per share, in the year-ago period. Revenue rose 32 percent to $14.4 billion.

Analysts, on average, had forecast the world's largest software maker to earn 46 cents per share on revenue of $13.89 billion, with sales estimates ranging from $13.73 billion to $14.09 billion, according to Reuters Estimates.

[Hiro_Kunimi_80]

yes, keep tellin that 2 yourself... :)

i'll do... Because it's true :)

[mabuza]

ouch

[GhaleonEB]

500k for a whole quarter year? isn't that kind of...low?

Actual sales to end-users last quarter were higher than the previous year. MS cut the shipment forecast for January - June to 2m units back in January. With the Elite coming in the second half of that, it makes sense that most of that 2m would come in the second quarter.

[crazyscreenwriter]

Microsoft is a beast. Simply a beast. What part of the loss is because of Zune, aka Poon, aka Poop, aka Shit?

Yeah, I was wondering the same thing. Most everyone I know has an Ipod (including myself), and those that don't have Sansa or Creative Zens of some sort. I do not know one person with a Zune.

[wartime1020]

Channel Stuffing.

[iceddomain]

500k for a whole quarter year? isn't that kind of...low?

They're clearing the channel for the Elite.